“ Using incentives to create a perception of greater brand value”  Consumer Market sales promotion › Induce household consumers to purchase a firm’s brand  Trade-Market sales promotion › Motivate distributors, wholesalers, and retailers to stock and feature a brand  Business Market sales promotion › Cultivate buyers in large corporations who make purchase decisions

 $300 billion in 2008  Growth rate: 4-8 percent  Reasons for growth: › Demand for accountability › Short-term orientation › Consumer response to promotions › Proliferation of brands › Increased power of retailers › Media clutter

 Short term demand vs. long term demand  Encourages brand switching vs. brand loyalty  Induces trial use vs. encourage repeat purchase  Promotes price vs. image  Immediate results vs. long term effects  Measurable results vs. difficult to measure

1. Stimulate trial purchase 2. Stimulate repeat purchases 3. Stimulate larger purchases 4. Introduce a new brand 5. Combat or disrupt competitors 6. Contribute to IBP

Push PolicyPull Policy Information Flow Consumer Retailer Wholesaler Producer Wholesaler Retailer

Coupons Price-off deals Premiums Contests Sampling Sweepstakes Brand placements Incentives Loyalty Programs Trade Shows Allowances Gift Cards Point of Purchase Displays

1. Coupons2. Price-off deals 3. Premiums4. Contests/sweeps 5. Samples & trials6. Phone gift cards 7. Brand placements8. Rebates 9. Frequency programs 10.Event sponsorship

 Entitles a buyer to a price reduction for a product or service  Advantages › Give a discount to price sensitive consumer while selling product at full price to others › Induce brand switching › Timing and distribution can be controlled › Stimulates repeat purchases › Gets regular users to trade up within a brand array

10 Coupons are the most widely used form of consumer sales promotion. Ad in Context Example

 Disadvantages › Time of redemption cannot be controlled › No way to prevent current customers from redeeming coupons › Coupon programs require costly administration › Fraud is a serious, chronic problem

 Offers consumer reduced price at point of purchase through specially marked packages  Advantages › Controllable by manufacturer › Can effect positive price comparisons › Consumers believe it increases value of a known brand  Disadvantage › Retailers believe it creates inventory and pricing problems

 Premiums: free or at a reduced price with another purchase  Free premiums provide item at no cost  Self-liquidating premiums require consumers to pay most of the cost of the item  Advertising specialties: › A message placed on a free, useful item

14 Premiums attract attention to a brand and offer the consumer something for free. Ad in Context Example

 Contests: consumers compete for prizes based on skill or ability.  Sweepstakes: winners picked by chance  Both create excitement and interest  But... › Legal and regulatory requirements are complex › Consumers may focus on the game rather than the brand › Difficult to get an IBP message across in a game

 Sampling: Giving consumer an opportunity to use a brand on a trial basis with little or no risk  Types of sampling › In-store(Costco)– Newspaper › Door-to-door– On-package › Mail– Mobile (on-site)  Trial offers › Used for more expensive items › Consumer tries product for a fixed time

 Manufacturers offer either for free or for purchase debit cards › with phone time › or preset spending limits  Examples include offers from Starbucks, Barnes & Noble, and The Gap

 Money back offer requiring the buyer to mail a request for money back from the manufacturer  Often tied to multiple purchases  Many consumers fail to bother sending in the rebate request form

 Also known as continuity programs  Offers customers discounts or free products for repeat patronage  Common in airline, hotel, and restaurant businesses

 Objectives: Uses a “push” strategy: Push the product into the distribution channel to the consumer: – Obtain initial distribution – Increase order size – Encourage cooperation with consumer market sales promotions – Increase store traffic

 Incentives: Push money  Allowances: Merchandise allowances, slotting fees, bill-back allowances, off-invoice allowances  Sales Training Programs  Cooperative (Co-Op) Advertising

 Trade Shows  Business gifts  Premiums and advertising specialties  Trial offers  Frequency programs

23 Trial offers are very effective in the business market. Why? Ad in Context Example

 Create a price orientation  Borrow from future sales  Alienate loyal customers  Time and expense  Legal considerations

 Definition › Materials used in the retail setting to attract shoppers’ attention to a brand, to convey primary product benefits, or highlight pricing information. › Displays may feature “price-off” deals as well.  Objectives for Point-of-Purchase Advertising › Draw consumers’ attention to a brand in the retail setting. › Maintain purchase loyalty among brand loyal users. › Stimulate increased or varied usage of the brand. › Stimulate trial use by users of competitive brands.

 Product displays and information sheets encourage retailers to support one distributor or manufacturer’s brand over another.  P-O-P promotions can help win precious shelf space and exposure in a retail setting.  A P-O-P display should be designed to draw attention to a brand, increase turnover, and possibly distribute coupons or sweepstakes entry forms.  To combat losing business to online shopping, retailers are trying to enliven the retail environment, and point-of-purchase displays are one strategy.

 Purpose: To reinforce or extend a message being delivered through other media › Signs, billboards, posters › Transit › Aerial › Specialty › Directory

 Advantages › Wide local exposure › Captivating › Around-the-clock exposure › Address an immediate need or desire  Disadvantages – Message limits – Location affects impact – Relatively expensive – Criticized by environmental groups

 Transit Ads › Urban environments › Demographic segmentation › Timely to purchase › Build brand awareness

30 Transit ads can reach a target audience in well defined geographic areas. Ad in Context Example

 Aerial Ads – Blimps increasingly common – Common at sporting events – Skies are getting crowded! – Networks are in control

 Advantages › High acceptance › High availability › Final link to purchase  Disadvantages – Too many directories – Long lead times – Limited creativity  New: CD-ROM and Web-based directories

33 Web based directories offer convenience and speed. Ad in Context Example

 Promotional Benefits of Packaging to the Advertiser: – The package carries the brand name and logo – The package can communicate “value” – The package can communicate “image” and “quality”

Packaging highlights the brand name, quality and image. Ad in Context Example

 Guerrilla Marketing—”Stunt” promotions  Viral campaigns—Using influencers (Chapter 20)  Special Events—Creating visibility and “affinity” for a brand among a highly select target group